Tuesday, July 29, 2014

Women, American Apparel, and the Danger of Advocating for Diversity

This week, two of my co-bloggers shared some great insights on the revamped American Apparel board of directors.  See Marcia Narine quoted in The Guardian article American Apparel adds its first woman to revamped board of directors; Joan Heminway, American Apparel 1, NFL 0. For those not following the American Apparel saga, the New York Times recently reported:

The founder and chief executive of American Apparel, Dov Charney, was fired this week because an internal investigation found that he had misused company money and had allowed an employee to post naked photographs of a former female employee who had sued him, according to a person with knowledge of the investigation. 

Beyond the public relations problems surrounding Charney’s departure, American Apparel is struggling financially as sales have dropped dramatically. As an initial step in trying start a turnaround, the company announced four new board members, including the company’s first female director, Colleen Birdnow Brown, former chief executive of Fisher Communications. 

When I opened the Guardian article quoting Marcia, I had another article open in the tab next to it from the Washington Post’s On Leadership section: For women and minorities, advocating for diversity has a downside.  That article explained:

In corporate America, diversity is about as controversial as motherhood and apple pie. CEOs love to tout the number of women in their upper ranks. Human resource departments like to trumpet their diversity programs in glossy reports.

But a new study finds that for female and minority executives, being seen as an advocate for diversity could actually have a downside. The researchers behind the study, which will be presented at the Academy of Management's annual conference in early August, found that women and minorities who were rated by their peers as being good at managing diverse groups or respecting gender or racial differences also tended to get lower performance ratings. That's because they may be viewed as "selfishly advancing the social standing of their own low-status demographic groups," the researchers write, a no-no when it comes to rating good managers.

Please click below to read more.

This research is, in itself, disappointing, but unfortunately not surprising. Obviously, Ms. Brown has a demonstrated track record of success that led American Apparel to seek her as a director, but this research suggests that her success could be lessened if she advocated for a more diverse board.  That’s too bad, because if that were her inclination (and I don’t know Ms. Brown), people should be listening to what she has to say on a whole host of topics, beyond (but including) who should be on boards of directors.  As an example, she has explained, "Companies need to care about their culture. They need to inspire their people so that everybody knows what is expected, the vision is clear, and the values of the company are established."

It’s worth noting here that it’s not just boards that have a lack of diversity.  The legal profession has long recognized a need for greater diversity among the ranks for partners and other leadership positions.  Recent ABA statistics show the legal profession as 66% male and 34% female.  In private practice, women are just 20% of the partners and 17% of the equity partners.  

For Fortune 500 companies, 21% of the general counsels are women. Such general counsels are overwhelmingly male (79%) and white (81.9%). For Fortune 501-1000 companies, the numbers are even more stark: Just 16% of GCs are female, while 91.7% are white and 83.2% are male. 

And it’s not just professionals; law schools have their issues, too. Female deans hold 20.6% of the positions available (maybe less).  For law schools, the ABA reports (Excel document here) the staff and faculty numbers are 55% male and 45% female, though that is potentially misleading, as men make up 67% of tenured faculty members. There is some progress being made, as the gender divide for non-tenured, but tenure-eligible faculty are 51.6% male and 48.4% female. Diversity numbers are similarly distributed, showing significant progress in the untenured ranks: ethnic minorities make up 16.8% of tenured faculties and 30.4% of non-tenured, but tenure-eligible faculty.

Lastly, for law students, women make up roughly 47% of the student population nationwide, though that number (despite significant effort) is noticeably lower here at my institution

In the business world, the legal world, and the academic world, we have made progress with regard to gender and ethnic diversity, but we still have work to do to create institutions that are representative of our nation’s population and the people each sector serves.  With the research suggesting that it harms females and minorities when they advocate for diversity, it seems appropriate that someone else should do it. So, that’s what I am trying to  do. 

http://lawprofessors.typepad.com/business_law/2014/07/women-american-apparel-and-the-danger-of-advocating-for-diversity.html

Corporate Governance, Current Affairs, Jobs, Joshua P. Fershee, Law School | Permalink

Comments

So glad you're writing about this, Josh. I appreciate your efforts to forward the interests of diversity—and womankind! At the risk of causing a negative reaction (!), I am picking up on the theme briefly, focusing only on corporate boards . . . .

In light of this post, I will be interested in your thoughts on a forthcoming piece I am publishing as part of the 20th Anniversary symposium issue of the William and Mary Journal of Women and the Law. The essay looks at gender diversity on corporate boards of directors through the lens of existing literature on crowd theory. The main takeaways relate to (1) attributes that women may uniquely bring to a corporate board, as group members, that make the board better and (2) positive effects that female directors have on board process.

Your post focuses in the end on institutions mirroring the population at large or populations served by the firm. For many, however, the challenge has been to provide further justification that women make a difference on corporate boards. Intuitively, many believe they do. But consistent empirical proof has been elusive. My reason for looking at women as members of the crowd of corporate directors is that I think their difference on boards emerges in context. Something to consider . . . .

Posted by: joanheminway | Jul 29, 2014 9:48:03 PM

Thanks for the comment, Joan, and I look forward to reading the article. The main takeaways you reference intrigue me, and I intuitively agree with them. At the risk of creating my own negative response, here’s my thinking:

I am specifically trying to avoid “essentializing” gender (or other minorities) because I think it can lead to poor outcomes. I am not suggesting that your piece does this (and my sense is that it does not), but I was worried in my writing about reinforcing (and even embracing) stereotypes, which can run the risk of keeping barriers in place, though I admit it could work toward removing others.

Thus, the reason I focus on boards (and other institutions) being representative of the population is because I think there are some possible downsides to the narrative that women are needed on the board because of their “unique attributes,” at least when those attributes are specifically identified. I worry that specifying attributes can serve to reinforce many of the long-held views about women generally (e.g., women are more sensitive or empathetic), especially if the rationale is put forth by someone who looks like me.

I believe that a more diverse board is likely to lead to better decision making because it helps avoid groupthink, and I think diversity brings different perspectives, at least on some issues, as a matter of course. Still, that doesn’t mean a diverse board can’t have a board that has a man who is “others centered” and a women who is “the techie.” My sense is that your research on how groups are different with diverse representatives would reinforce this. I maintain the gender (and other) diversity can add to the value of the board, regardless of the role any individual takes, so I was working to avoid identifying specific attributes diversity brings other than the actual presence on the board.

Posted by: Joshua Fershee | Jul 30, 2014 10:57:23 AM

Post a comment